Last week the Federal Trade Commission announced that, along with all 50 states and the District of Columbia, it was taking legal action against four 'sham' cancer charities. Allegations that the groups deceived donors to the tune of $187 million have rippled through the non-profit world. We consider what red flags donors should be on the lookout for and how data can - and can't - help us decide who's a good actor.
This week, an American delegation led by former New Mexico Gov. Bill Richardson and Google executive Eric Schmidt visited North Korea. The visit, described as a humanitarian mission to win the release of an American held in detention, prompted criticism from the State Department. Kojo examines whether business interests were underpinning the trip, and what we know about the North Korean economy.
- Marcus Noland Senior Fellow and Director of Studies, Peter G. Peterson Institute for International Economics; co-author, “Famine in North Korea: Markets, Aid, and Reform” (Columbia University Press)
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show" connecting your neighborhood with the world. Later in the broadcast "The Twelve Tribes of Hattie," a debt novel explores the story of a black family in the midst of the great migration. But first, the riddle of North Korea.
MR. KOJO NNAMDIThis week a controversial American delegation including a Google executive and the former democratic presidential candidate visited the North Korean capital of Pyongyang. The stated goal of the trip was to free an American tour guide held prisoner by the regime and to urge Pyongyang to increase its citizens' access to information. But the trip was controversial from the start. The State Department called the timing unhelpful while some critics openly speculated about unintended consequences, moral hazards and ulterior motives.
MR. KOJO NNAMDIJoining us to talk about this is Marcus Noland, senior fellow and director of studies at the Peter G. Peterson Institute for international economics and coauthor of the book "Famine in North Korea: Markets, Aid and Reform." He joins us from studios at the Peterson Institute here in Washington. Marcus Noland, thank you for joining us.
MR. MARCUS NOLANDMy pleasure.
NNAMDIOn one level this trip by Google executive Eric Schmidt and former New Mexico Governor Bill Richardson was marketed as a humanitarian mission to free a Korean American held by the regime. But we're learning today that it didn't actually achieve that goal. What do we know about why these people visited Pyongyang?
NOLANDWell, anything I have to say about their motivations is of course speculative.
NOLANDThere are four principals in that mission, Governor Richardson, who you mentioned, his assistant Tony Namgung, Mr. Schmidt who you mentioned and his assistant Jared Cohen. Now in the case of Namgung and Richardson, they have business interests in North Korea and they need to maintain contacts with the North Korean regime. And bringing along a prominent American to visit is a way of maintaining their bona fide. So their interest in this -- their narrow interest at least is clear.
NOLANDAnd also one has to say that Namgung and Richardson have been involved in previous what amount to hostage extraction efforts. So it's not implausible to think that they might be able to get out this tour operator, Mr. Bae. The motivation for the Google side is much harder to grasp. North Korea is relatively small and poor economy. It is extraordinarily repressive. There's very little information technology or access to the internet so the commercial interest that Google might have in North Korea is really quite hard to discern.
NOLANDAlthough one might have thought that Mr. Schmidt could've been persuaded that given his sort of charisma as head of Google, that he might be able to persuade the North Koreans to open up more broadly as well as helping with the rescue of Mr. Bae, which sadly doesn't seem to have succeeded.
NNAMDIWell, I guess it could be seen as Mr. Schmidt getting his food in the door so to speak. But many North Korean watchers, yourself included, were skeptical of this trip, especially in the light of how the regime would, could use it to bolster its claims of legitimacy. What did North Korean, in your view, want or could gain from this?
NOLANDWell, the North -- you know, again, this is all speculative. There may be things that have gone on behind the scene that might be highly constructive that we simply don't know about. But as far as we can tell, from what we can observe at this point, the North Koreans gained a kind of propaganda coup. They had the head of Google visiting North Korea. They took him to some computer labs where he was photographed in front of, you know, multiple terminals with students working at them and so on.
NOLANDWhich would portray North Korea as not a very backwards and destitute country, but rather an important country, you know, a technological frontier, lots of computers, people working at them, the head of Google touring their facilities. So from their standpoint this was a great propaganda coup. Now there may have been more that went on behind the scenes but at least thus far it seems to be North Korea and propaganda coup and the delegation coming home empty handed.
NNAMDIIf you'd like to join this conversation you can call us at 800-433-8850. How, in your view, should the U.S. engage regimes like North Korea, 800-433-8850? Marcus Noland, there's a paradox when it comes to dealing with this regime. On the one hand, the International Community holds most of the cards. North Korea needs humanitarian aid to feed its people. And the regime is extremely isolated. And yet you argue that North Korea has very shrewdly manipulated those relationships and even used basic aid to bolster its power.
NNAMDIFor example, the World Food Program delivers food aid to North Korea to alleviate hunger, a program that's explicitly nonpolitical. But many people feel that this aid is indirectly bolstering the regime. Can you please explain?
NOLANDSure. And I want to make it quite clear that I don't regard North Korea as any great success. I mean, this is a destitute country where according to a recent UNICEF survey 10 percent of the children that they measured are stunted -- severely stunted which is going to confer lifelong mental and physical problems for them, which will be passed on intergenerationally. So I want to make it quite clear, I don't regard this as a success story.
NOLANDWhat the North Korean -- but paradoxically, as you say, the North Korean's weakness is in fact a source of leverage over the rest of the world. Their neighbors, China and South Korea are really afraid of the collapse of this state and so they're never willing to push North Korea all that hard. And as you mentioned, we've had a longstanding humanitarian aid program there. But what happens when we provide aid -- food aid, for example, the North Koreans simply cut their commercial imports of food. And those resources are then deployed -- you know, the freed up resources that would've been spent on importing food are used for other purposes, including the military.
NOLANDSo someone like me who actually does support humanitarian engagement with North Korea and does think that aspect of our engagement should not be conditional in politics, has to be honest and admit that when we do that we are implicitly supporting this regime and its preferences in areas that we might not like, including the military.
NNAMDIWe're talking with Marcus Noland. He is senior fellow and director of studies at the Peter G. Peterson Institute for international economics, and coauthor of the book "Famine in North Korea: Markets, Aid and Reform." We're talking about North Korea and the recent visit there by former presidential candidate Bill Richardson and the head of Google. 800-433-8850 is the number to call. That is the Google executive and the former presidential candidate.
NOLANDMarcus Noland, it's been just over a year since Kim Jong Un was declared the supreme leader of North Korea after the death of his father, Kim Jong Il. And in many ways North Korea remains a kind of hermit kingdom. What do we know about the North Korean economy? Who are its trade partners? What does it export?
NOLANDYou know, we don't know much. The largest trade partner is China. And China probably accounts for roughly 70 percent of North Korean trade. Second largest trade partner is South Korea. Relations with South Korea were very bad under the current president of South Korea. A new president is being inaugurated there next month. And I would expect that relations will improve at least somewhat. And so those relative trade figures will change a bit.
NOLANDBut the country mainly is dependent, at this point, on China for trade. The economy largely revolves around a resource extraction. They mine minerals and they generate other natural resource products like sea urchins and seaweed and ginseng and so on. And they trade it to the Chinese in return for consumer goods and oil and food.
NNAMDIWe seem to have lost Marcus Noland for the time being. Are you there, Marcus?
NOLANDYes, I'm here.
NNAMDIOh, okay. It's -- a number of commentators have pointed out the obvious moral hazards of working with this regime and possibly giving it legitimacy. But allow us to push back against those critiques. If our stated goal is to get rogue regimes to open up and join the International Community, don't we need to have people on the ground before those changes happen to indeed prime the pump, so to speak?
NOLANDSure. In previous cases like the case of the Soviet Union there were a limited number of individuals, say in the United States or Western Europe, oftentimes for unusual reasons of their personal background, were able to maintain contact with the elites in the Soviet Union. And acted as kind of go-betweens and, you know, tried to intermediate some business and so on. When political changes occurred in the Soviet Union, Eastern Europe those individuals pretty quickly lost their status. Because that had been derived almost entirely from personal contacts.
NOLANDSo, yes, North Korea is an odious regime. Nevertheless there's a need for some people to, you know, have contact with them precisely to play this role.
NNAMDIIf we had no backchannel relationship with North Korea or with a country like Burma four years ago, we'd have a lot of trouble building relationships and taking advantages, would we not?
NOLANDSure. You need to have contact and it's particularly acute in the case of North Korea where we don't have formal diplomatic relations. So, in fact, the -- we have a series of channels through which we interact with them including things like recovery of the remains of American soldiers killed in the Korean War. We do some of it through UN programs like the World Food Program we discussed earlier. There are various mechanisms for us to maintain talking to North Koreans but of course, you know, this is -- the sort of Richardson Namgung variant is yet another one of those.
NOLANDI think what we have to be careful though is that there's also a pernicious problem with regard to North Korea. And that is if you play the game of getting involved with the elites of that regime than you pull your punches on return to the United States. I think it's quite clear that a number of individuals who have unusually privileged access to the regime either are extremely careful in their public comments or paint North Korea in an overly positive way and so on precisely because they themselves develop a personal self interest in maintaining those relationships for financial, psychic or other reasons.
NOLANDSo one has to be very careful about how one plays the game and how we interpret the statements of people who play that role.
NNAMDIGlad you brought that up because this was a nine-person delegation. While the big names were Richardson and Schmidt, you mentioned the other noteworthy person, the advisor Tony Namgung. Over the years he's been an informal conduit between the regime and the American government. Who is he and, more importantly, what's his role today?
NOLANDWell, I'm not an expert on Tony Namgung but Tony was -- he got a PhD at Berkley under a very eminent scholar, Bob Scalapino. He did not have a successful academic career. He ended up as the executive director, I believe, of the Asia Society in New York, and has kind of parlayed a very interesting personal background and set of linguistics skills and so on to this role. He now owns a consulting firm that is involved in intermediating business with North Korea. My understanding is also with Burma pre-reform and other kind of, you know, play -- trying to play that niche role. And that's what he does.
NNAMDIArguably one of the Obama Administration's biggest successes over the past four years has been the opening of relations with Burma, also known as Myanmar. How would you compare the two?
NOLANDNorth Korea's a much harder nut to crack. Both countries are -- have been internally repressive but the Burmese resemble more of a traditional military dictatorship. North Korea has an incredibly institutionalized system of repression. And it's precisely that degree -- I mean, they inherited a Leninist political system and all its articulated institutions from the Soviet advisers at the end of the Second World War. And that is a very strong political system. It may be a very bad system. It may generate evil and all sorts of terrible outcomes. But from a purely objective standpoint it is a very effective system. And so...
NNAMDIHas that system, in any way, changed since, well, Kim il Sung through Kim Jong Il not to Kim Jong Un. Has there been any significant change in that system at all?
NOLANDThere has been change. One of the myths about North Korea is it's unchanging. That's not true at all. Under Kim il-Sung it was basically a traditional Leninist system. Under Kim Jong il, his son who inherited power, it started to devolve more towards a kind of military dictatorship. There was a withering away of the party, a rise in military influence. Under Kim Jong Un who took power about a year ago there seems to be a kind of rebalancing going on.
NOLANDHe -- apart from the theatrical aspects of politics, he's modeling himself wisely on his grandfather and not his father in that regard. He seems to be favoring the party and the party seems to be rising and sort of normal state institutions of the cabinet seem to be rising in influence somewhat relative to the military. So it's not the case that this is unchanging system but it is a fundamentally stronger political system than say what one sees in Myanmar Burma with the generals there.
NNAMDIJust quickly because we're running out of time, how indicative of that change is the fact that there's a cell company being run by Egypt in North Korea right now?
NOLANDThat's also a very interesting situation. If there is a group that is good at making money in challenging environments, Orascom Telecom might be one of them. They've made money in Sub-Saharan Africa, Central Asia and so on. So the idea of them operating a cell phone network in North Korea is not entirely implausible. Nevertheless, relations between the government of North Korea and the government of Egypt have historically been robust and somewhat opaque. And I don't think we should necessarily take the Orascom operation in North Korea on face value.
NNAMDIRobust and opaque. I think we'll leave with that one. Marcus Noland is senior fellow and director of studies at the Peter G. Peterson Institute for international economics, and coauthor of "Famine in North Korea: Markets, Aid and Reform." Marcus Noland, thank you for joining us.
NOLANDThank you. It was my pleasure.
NNAMDIWe're going to take a short break. When we come back "The Twelve Tribes of Hattie," a debut novel explores the stories of a black family in the midst of the great migration. We'll talk with the author Ayana Mathis. I'm Kojo Nnamdi.
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